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Legal & General Investment Management issues economic warning

A note of caution has been issued by Legal & General Investment Management regarding the economic situation in the UK.

James Carrick, economist at the firm, suggested that the economy may not be in as good health as many investors think.

He claimed low interest rates should help credit conditions, since they will boost the profitability of bank lending.

Legal & General Investment Management also claimed that government forecasts may be too generous, with the company stating there is a one-in-three chance that the UK could fall back into a recession by 2012.

"The sharp cuts in public spending that the government made in the recent emergency Budget represent the largest fiscal tightening since the Second World War," Mr Carrick pointed out.

This month, Legal & General revealed that it has agreed to work alongside the state to help develop an effective social security system, saying that the organisation wants to help and is able to do so.